Summary
In D G Flooring, LLC v. Home Depot U.S.A., Inc., Civil Case No. JFM-04-2954, 2005 U.S. Dist. LEXIS 3992 (D. Md. Mar. 15, 2005), a case cited by Britt/Paulk, this Court held that the plaintiff flooring company could not reasonably believe that it was the exclusive flooring installer for Home Depot because the parties' 1997 contract expressly provided that there was no exclusivity and the parties' 2002 contract, which fully integrated the 1997 contract, likewise made no mention of exclusivity.
Summary of this case from G.M. PUSEY ASSOCIATES, INC. v. BRITT/PAULK INS. AGCY.Opinion
Civil No. JFM-04-2954.
March 15, 2005
MEMORANDUM
Plaintiff DG Flooring, LLC ("D G") initially brought this action against Defendant Home Depot U.S.A., Inc. ("Home Depot") alleging six counts. By an Order dated December 8, 2004, this Court dismissed each count of the Complaint but gave DG leave to amend Counts II (fraud) and VI (defamation). D G filed an amended complaint on December 20, 2004. Home Depot's Motion to Dismiss the two counts of the Amended Complaint is presently pending before this Court. For the reasons stated below, Home Depot's Motion will be granted.
I.
The majority of the relevant facts were set out in this Court's first opinion in this case. See D G Flooring, LLC v. Home Depot U.S.A., Inc., 346 F. Supp. 2d 818, 820-21 (D. Md. 2004). The only new relevant allegations relate to D G's defamation claim. In support of that claim, D G alleges that a Home Depot employee falsely stated to other employees that "D G could not make payroll, had checks bouncing, and was unable to purchase supplies" and that a Home Depot employee stated to a customer that another installer was "better." (Compl. ¶¶ 63, 64).
II. A.
Count II alleges that representatives of Home Depot fraudulently induced D G to enter into the 2002 Agreement by falsely promising that D G would be the exclusive installer for the Baltimore region. To sustain a claim for fraudulent inducement, a plaintiff must allege "(1) that the defendant made a false statement of material fact to the plaints; (2) that its falsity was either known to the defendant or the representation of fact was made with reckless indifference as to its truth; (3) that the misrepresentation of fact was made for the purpose of defrauding the plaintiff; (4) that the plaintiff relied upon the representation and had the right to rely on it; and (5) that the plaintiff suffered compensable injury from the misrepresentation." Wootton Enters. v. Subaru of America, 134 F. Supp. 2d 698, 714 (D. Md. 2001) (citing VF Corp. v. Wrexham Aviation Corp., 350 Md. 693 715 A.2d 188, 193 (1998)).D G cannot sustain its claim because, as a matter of law, it could not have reasonably relied on the allegedly false representations of exclusivity. The alleged exclusivity agreement is directly contradicted by the explicit language of the 1997 Agreement as incorporated into the 2002 Agreement. The Wootton court faced a similar issue. In Wootton, a party brought a fraud claim alleging reasonable reliance on false promises made prior to the execution of a written agreement. The written agreement contained a merger clause and did not contain the false promises. The court found that any actionable statements or enforceable promises were superseded by the fully integrated writing. Therefore, any reliance on those statements was unreasonable. Id. at 715.
The clause read: "The Subaru Dealership Agreement, these Standard Provisions and the documents referred to or incorporated by reference therein contain the entire understanding between the parties. No representations or statements other than those expressly set forth therein or herein were made or relied upon in entering into the Agreement."
Any reliance by D G is similarly unreasonable as a matter of law. D G's relationship with Home Depot was governed by the 2002 Agreement and the 1997 Agreement incorporated therein. See D G Flooring, 346 F. Supp. 2d at 821-22. The Agreements contained a merger clause in Paragraph 14.5 explicitly negating any prior representations. As with the plaintiff in Wootton, D G's reliance on any statements not found in the Agreement was unreasonable as a matter of law. See also Genex Corp. v. G.D. Searle Co., 666 F. Supp. 755, 758-59 (D. Md. 1987) (reliance on misrepresentations made during contract negotiations leading to a written agreement was unreasonable as a matter of law where (1) reliance was based on an "untenable premise" regarding contracting partner's business strategy, (2) the limited nature of the written agreement negated the reasonableness of a large capital investment, and (3) both parties were represented by legal counsel).
"This Agreement, together with the Exhibits and attachments hereto, if any, and The Home Depot's then current Purchase Order, installation Contracts and procedures constitute the entire Agreement between the parties. Any prior agreements, promises, negotiations, or representations that may have been made or relied upon which are not expressly set forth in these documents are of no force or effect. This Agreement may only be amended or modified by a writing signed by an authorized representative of the Home Depot and by Contractor."
B.
D G's claim for defamation also fails as a matter of law. To state a claim for defamation in Maryland, a plaintiff must show (1) that the defendant made a defamatory communication to a third person; (2) that the statement was false; (3) that the defendant was at fault in communicating the statement; and (4) that the plaintiff suffered harm. Samuels v. Tschechtelin, 135 Md. App. 483, 544, 763 A.2d 209, 242 (2000). With respect to damages, a plaintiff must "show a basis for believing that the plaintiff suffered actual injury as defined in Jacron [ Sales Co v. Sindorf, 276 Md. 580, 350 A.2d 688 (1976)]." Wineholt v. Westinghouse Elec. Co., 59 Md. App. 443, 449, 476 A.2d 217, 220 (1984) (quoting Metromedia Inc. v. Hillman, 285 Md. 161, 172, 400 A.2d 1117, 1123 (1979)); see also Gooch v. Maryland Mech. Sys. Inc., 81 Md. App. 376, 392-93, 567 A.2d 954, 962 (1990).
D G alleges only two statements that could rise to the level of a defamatory communication. First, D G alleges that Ginny Donnelly, a District Manager at Home Depot, made false statements to store personnel "that D G could not make payroll, had checks bouncing, and was unable to purchase pad supplies." (Compl. ¶ 63). Second, D G alleges that Michelle Lowman "contacted a customer that D G was scheduled for install and tried to get the customer to disallow D G by stating that she had a `better' installer to do the work." (Compl. ¶ 64). With respect to these statements, D G has made no allegations establishing; directly or inferentially, that the alleged statements resulted in any actual injury. Because Plaintiff did not show a basis for actual damages, Plaintiff cannot sustain an action for defamation.
The second of the alleged statements is not actionable for the additional reason that it merely is a statement of opinion. See, e.g., Biospherics, Inc. v. Forbes, Inc., 151 F.3d 180, 186 (4th Cir. 1998).
III.
Section 14.8 of the 1997 Agreement provides that "[s]hould The Home Depot engage the services of an attorney to enforce any of its rights hereunder, or to collect any amounts due, Contractor shall pay The Home Depot for all costs and expenses incurred, including reasonable attorney's fees, as permitted by State law." On the basis of this provision, Home Depot asks that it be reimbursed for the reasonable attorney's fees it has incurred in this action.Plaintiff argues that the provision does not apply because this is not an action in which Home Depot has sought "to enforce any of its rights" but rather one in which Home Depot has defended against DG's enforcement of its alleged rights. Home Depot responds by contending that in defending against plaintiff's assertion of rights that it does not possess, Home Depot is enforcing its rights to (1) not guarantee to DG any amount of business, pursuant to paragraph 1.2 of the Agreement, and (2) terminate the contractual relationship at its will, pursuant to paragraphs 3.1 and 6.3. The question is a close one. However, because the language of Section 14.8 appears to encompass actions affirmatively instituted by Home Depot, Home Depot's request for attorney's fees will be denied.
ORDER
This court having entered an order on December 8, 2004, dismissing the original complaint in this action but giving plaintiff leave to amend counts II and VI and this court today, in the accompanying memorandum and order, having granted defendant's motion to dismiss counts II and VI in the amended complaint, it is, this 15th day of March 2005.ORDERED.
1. Defendant's motion to dismiss the amended complaint is granted;
2. Defendant's request for attorney's fees is denied; and
3. This action is dismissed.